Islamabad, Pakistan – The global money laundering and financing watchdog on Friday removed Pakistan from its list of countries under “increased monitoring” after four years.
Pakistan has been on the “grey list” of the Financial Action Task Force (FATF) since 2018 because of “strategic counter-terrorist financing-related deficiencies”.
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The removal decision was announced by FATF President T Raja Kumar at the end of a two-day meeting in Paris, France.
“Pakistan had addressed technical deficiencies to meet the commitments of its action plans,” Kumar said in his speech.
At the last FATF meeting in June, the organisation said Pakistan would be kept on the list until a visit to the country took place to verify progress.
Subsequently, a FATF technical team travelled to Pakistan in late August and the visit was declared a “success” by Pakistan’s foreign office, which said it expected a “logical conclusion” at the next evaluation meeting in October.
Pakistan’s Prime Minister Shehbaz Sharif in a tweet after Friday’s decision was announced congratulated the country on its removal.
“Pakistan exiting the FATF grey list is a vindication of our determined and sustained efforts over the years. I would like to congratulate our civil & military leadership as well as all institutions whose hard work led to today’s success,” he wrote.
Pakistan 🇵🇰 exiting the FATF grey list is a vindication of our determined and sustained efforts over the years. I would like to congratulate our civil & military leadership as well as all institutions whose hard work led to today's success. Aap sab ko bohat bohat Mubarak 🙂
— Shehbaz Sharif (@CMShehbaz) October 21, 2022
After placing the country on the grey list in 2018, FATF gave Pakistan a 27-point action agenda, which was later increased to 34-points, related to money laundering, terrorist financing, and action against armed groups and individuals.
Being on the list can severely restrict a country’s international borrowing capabilities.
The decision comes at a time when Pakistan’s credibility on the global market has taken a pounding because of its precarious economic situation.
Earlier on Friday, global ratings agency Fitch cut Pakistan’s sovereign credit rating, blaming its funding situation as well as declining foreign reserves.
Ratings agency Moody’s Investor Service also cut Pakistan’s sovereign credit rating earlier in October, citing the government’s declining foreign reserves and growing economic stress in the aftermath of devastating floods earlier this year.
The floods, caused by unprecedented monsoon rains, killed more than 1,700 people, affected 33 million, and caused $30bn in damage, according to the government.
‘Stay on course’
Senior economist Haroon Sharif said the development was great news for Pakistan as it will allow financial flows from banking channels and remittances.
“What the country must do now is to stay on course, and the major impediment in that has been its implementation capacity. It must reform institutions, which can then trap and identify any suspicious transaction and punish whoever is involved,” he told Al Jazeera.
Sharif, who previously served as minister of state investment, said Pakistan should have been removed from the list at the June meeting.
“We had met all the points of action plan, but unfortunately, FATF also has a political dimension to it,” he added.
Business and economy journalist Khurram Husain also welcomed the removal. “Pakistan had to face higher transaction costs due to the higher processing burden that ‘enhanced monitoring’ imposed on all transactions with the outside world,” he told Al Jazeera.
Husain noted Pakistan went back on the main list because of its failure to successfully prosecute “proscribed individuals”.
“Once key convictions were secured, such as those of Hafiz Saeed of the Lashkar-e-Taiba (LeT) group and Jamaat-ud-Dawa (JuD) group in April of this year, the path to exiting the list was opened up,” he said.
JuD is a humanitarian relief and religious education organisation operating across Pakistan. It has been designated a front for LeT, an armed group declared a “terrorist organisation” by Pakistan, the United States, and the United Nations.